According to initial reports, an announcement due later today will state that major ISPs in the UK have reached an agreement to work with the music industry to start mass warning file-sharers. The deal, brokered by the government, will see hundreds of thousands warned but not disconnected.

In what will be seen by the British Phonographic Industry as a partial victory in its war against file sharers, major ISPs in the UK have agreed to music industry demands to start sending out warning letters to those it accuses of sharing its copyright works.

The report states that the deal was agreed by six of the UK’s most prominent Internet Service Providers following intense government pressure. It’s estimated that these as-yet unnamed ISPs will send out hundreds of thousands of letters to suspected uploaders of music. The ISPs – thought to include Virgin Media who already did an early deal – are BT, Orange, Tiscali, Carphone Warehouse (AOL, TalkTalk) and BSkyB.

Demands from the music industry to disconnect uploaders from the Internet have not been met by the ISPs nor insisted upon by the government as Culture Secretary Andy Burnham had already stepped back from a government implemented ‘3 strikes and you’re out’ policy. One ISP, Virgin Media, already indicated that there was “absolutely no possibility” of them disconnecting alleged pirates from the Internet.

However, it’s being reported that other measures may be taken against alleged file-sharers, including traffic management techniques being deployed to punish persistent offenders. As we reported earlier, this element is likely to be negotiated by the UK telecoms regulator, Ofcom.

The Times is reporting that other steps may be taken by the government such as the introduction of an annual Â£30 ‘download tax’. Peter Jenner, a music industry player who has been supporting such a plan said that the tax could bring in enough turnover to support the music industry: “If you get enough people paying a small enough amount of money you can turn around the wheels of the music industry” he said. Although UK citizens are used to this type of charge with the current TV licensing system, this type of tax seems unlikely to succeed in the current environment.

A Memorandum of Understanding drawn up by the Department for Business, Enterprise & Regulatory Reform (BERR) and signed by all six ISPs states that not only must the ISPs commit to a “significant reduction” in music file-sharing in the UK but they must also help develop legal music services too. One can see how this might be attractive to certain ISPs, such as BSkyB who just days ago signed a deal with Universal to set up an online music service “to rival iTunes”.

All this will be backed up by an educational campaign to ensure that every customer knows that it is illegal to upload copyright music.

More on this breaking news as we get it during the day.

Update: Geoff Taylor, chief executive of the BPI says reports of a levy are incorrect: “A levy is not an issue under discussion. It has not been discussed between us and government and as far as we are aware it is not on the table.”